BT is denying reports that it has stopped the marketing of its converged fixed/mobile phone service, known as Fusion.

Unlike many of its European rivals, BT has no mobile arm, and has had to rely on broadband and IT services in recent years to drive growth, amid declining voice revenues. BT unfortunately brought into the prevailing financial wisdom of the time and sold off its mobile arm (BT Cellnet, now known as the Telefonica-owned operation, O2) back in 2001 in an effort to pay off spiralling debts.

The UK carrier launched Fusion (originally called Bluephone during its development) back in June 2005. Last year T-Mobile USA launched a similar converged service, joining France Telecom's Unik service.

Essentially the Fusion handset uses Bluetooth to connect to a base station within the house to switch calls over a BT broadband link (VoIP over broadband). Once outside the house, the Fusion handset operates as a mobile phone, piggy backing on Vodafone's mobile network or BT's Wi-Fi hotspots. Nowadays, mobile operators are considering indoor 3G base stations, known as femto cells.

But barely two and a half years after its launch, BT has stopped marketing Fusion according to a report in the Daily Telegraph.

"We continue to market Fusion to small businesses and corporate customers," a BT spokesman told Techworld, although he admitted that marketing of the device to the consumer market has been scaled down. "We have scaled down the marketing for our consumer audience," he said.

"Fusion has been warmly received by small business and corporate," added the spokesman. "There are clear economic benefits for businesses using the Fusion service."

However BT has only sold 45,000 Fusion phones since its launch back in 2005 to the consumer market, a far cry from the millions of customers it was hoping for when it was launched.

BT said that it has no figures for the business sector, as Fusion phones often tend to be used in a combined service offering.

BT did however reveal that it is conducting a low level trial for a new mobile service, aimed at consumer market. This would use a Blackberry style device, which would give customers Internet and email access. The Telegraph says the BlackBerry-type devices would be made by Taiwan's HTC, and the service would use the same technology as Fusion.

BT does not have a launch date for this new service, and the UK carrier will unveil its third quarter results tomorrow.